Although still in the grip of a financial predicament, owing to poor construction prospects in South Africa paired with bad debts and cash-depleting projects, local construction company Basil Read’s CEO Khathutshelo Mapasa tells Engineering News Online that he is confident about the company’s future prospects.

In a telephone interview on Wednesday, he outlined that, with the irrevocable backing of 55% of its shareholders and the partial underwrite from the Industrial Development Corporation for its proposed capital raise, he was confident that the company would reach the goal of raising R300-million.

“We were able to talk to those big shareholders,” Mapasa said, referring to the likes of institutional shareholders Allan Gray, PSG Asset Management and Prudential Investment Managers, but added that its shareholder register started to tail off.

“You then start talking to people with less than a million shares, less than a hundred thousand shares and that’s the task that we are [busy with at] the moment,” he pointed out, noting that the discounted rights offer – which led to a 23% tumble in its share price when it was announced – became attractive to the smaller shareholders.

The company on January 29 announced the terms of its right offer, through which it plans to issue 1.36-billion shares at 22c apiece – a discount to the 65c apiece closing share price on January 26.

Mapasa highlighted that he expected the market to react to the discount, adding that the company, which was the main constructor on the £285-million St Helena airport project, was still trading at a premium against the actual write-off.

“I’m encouraged by the fact that we are still trading above the rights offer price,” Mapasa said.

He added that the company would continue to focus on its strong points, securing contracts at a minimum margin and securing an order book.

“[Our] businesses also need further investment, so we will be using some of the proceeds to invest even further, as we have a competitive advantage and have always delivered profits [in the mixed-use developments sector and mining],” he highlighted.

“What is required in South Africa is more investment from the private sector and we are starting to see some [improvement, particularly in the mining space],” he noted, citing major projects such as De Beers’ $2-billion Venetia expansion project and Vedanta Zinc’s developing Gamsberg project in the Northern Cape.

“The task for Basil Read is to really position ourselves to participate and capture our market share in that space,” Mapasa noted.

Basil Read was also still looking at disposing three noncore assets worth R150-million, with this process at an advanced stage.